Crowdtilt raises cash in new ways

FUNDRAISING Crowdtilt helps people pool money for events and causes

James Beshara, left, and Khaled Hussein co-founded Crowdtilt, a crowd-funding website. They are photographed at their offices in San Francisco, Calif., Friday, May 4, 2012.

James Beshara, left, and Khaled Hussein co-founded Crowdtilt, a crowd-funding website. They are photographed at their offices in San Francisco, Calif., Friday, May 4, 2012.

Photo: Sarah Rice, Special To The Chronicle

Photo: Sarah Rice, Special To The Chronicle

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James Beshara, left, and Khaled Hussein co-founded Crowdtilt, a crowd-funding website. They are photographed at their offices in San Francisco, Calif., Friday, May 4, 2012.

James Beshara, left, and Khaled Hussein co-founded Crowdtilt, a crowd-funding website. They are photographed at their offices in San Francisco, Calif., Friday, May 4, 2012.

Photo: Sarah Rice, Special To The Chronicle

Crowdtilt raises cash in new ways

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In April, Ben Jacobs threw what may have been the year's most elaborate party devoted to the film "Point Break."

More than 100 people piled into his SoMa apartment to watch the 1991 Keanu Reeves-Patrick Swayze classic. Jacobs and his friends spent $1,000 on food, drink and a magician who walked around performing tricks.

Jacobs says he wouldn't have planned such a party without Crowdtilt, a new site that aims to take the friction out of pooling money for special events and causes.

"It can unleash some ideas that you otherwise wouldn't have any intent of doing," Jacobs said. "With the amount of money we were able to raise, we wound up doing a lot more."

Crowdtilt is among the entrants in the field known as crowd funding that is growing increasingly crowded itself.

Kickstarter, the best-known crowd-funding site, allows people to financially back creative projects, often in a way that lets users preorder items or receive special perks for pledging their support early. Since it was founded in 2009, more than 1.5 million people have pledged $200 million to projects.

Other emerging crowd-funding sites include Indiegogo, RocketHub and Zokos, which is built for planning parties.

Crowdtilt allows users to create "campaigns" in which a person sets a goal - say, $1,000 for a bachelor party - and invites friends to participate using Facebook. There is no cost for campaigns that fail. Money changes hands only if contributions hit the goal - or "tilt" - at which point Crowdtilt takes a 2.5 percent fee.

"It's the risk-free nature of it - you can just throw up a campaign and know you're only going to get charged if this reaches the minimum amount needed," said James Beshara, Crowdtilt's 26-year-old founder and CEO. "And it really removes this fear inherent in supporting any cause - that it will only be partially funded."

Microlending roots

For Beshara, the path to funding "Point Break" parties led through Africa. As a student at Wake Forest University, the Texas native studied development economics, and later worked on development issues in South Africa. He became interested in the practice of microlending, or providing small loans (usually without collateral) to subsistence farmers and struggling merchants in developing countries.

But where most microlenders would ask a single person to donate $100 to a farmer, Beshara thought it might be more successful to let groups donate smaller amounts together. In 2010 he started a site, Dvelo.org, intended to do just that.

But as sometimes happens with startups, a tool built to do one thing quickly began to be used for another. Beshara watched as users came to his site and, instead of funding charitable causes, funded tailgate parties. And party buses. And bachelor parties. Anything a young, tech-savvy group of people might do for fun, his site was helping to make happen.

Beshara decided to shift his focus toward the parties, thinking that people who enjoyed using it to plan parties might one day use it to support causes as well.

"If you want to try to build something that can accommodate both, you have to start on the light and fun side of things," he said.

Beshara brought on a co-founder, Khaled Hussein, whom he met through an angel investor in Austin. They built a new prototype for the site, now called Crowdtilt, and were accepted into the most recent class at Y Combinator, the prestigious Silicon Valley startup incubator whose successes include Dropbox and Airbnb.

Offices in SoMa

Crowdtilt has been live for 11 weeks and is closing in on $1 million in payments processed through the site. The six-person team, which recently relocated from the Peninsula to an office in SoMa, is surprised by the uses people find for the site.

In Colorado, an unemployed groom and his hospitalized wife used Crowdtilt to fund the wedding that their financial problems were threatening to derail. Most recently, a woman used Crowdtilt to ask friends and family pay for a breast enhancement (they backed the project).

Now Crowdtilt is raising its first round of funding. Its backers include SV Angel, Reddit co-founder Alexis Ohanian, Felicis Ventures and Crunchfund.

Its latest backer, as of Thursday, is DCM, where "Point Break" party planner Jacobs works as an associate. After using the site several times, Jacobs said, he recommended that DCM consider investing in it. Jacobs said he was particularly impressed by how many people at the first party he threw using Crowdtilt went on to plan outings of their own - a sign that Crowdtilt will grow virally.

The only real downside to the party, he said, was that it was so popular that people had trouble focusing on the movie.

"The brilliance of Gary Busey was really lost on the audience," he said.